Stock (Symbol) |
Express Scripts (ESRX) |
Stock Price |
$86 |
Sector |
| Healthcare |
Data is as of |
| December 21, 2015 |
Expected to Report |
| Feb 22 – Feb 26 |
Company Description |
 Express Scripts Holding Company provides healthcare management and administration services on behalf of its clients, which include health maintenance organizations (HMOs), health insurers, third-party administrators, employers, union-sponsored benefit plans, workers compensation plans, and government health programs. The Company operates in two segments: Pharmacy Benefit Management (PBM) and Emerging Markets (EM). Source: Thomson Financial |
Sharek’s Take |
 Pharmacy Benefit manager (PBM) Express Scripts (ESRX) just upped earnings estimates for 2016, which was actually one day after we updated ESRX’s charts and tables. Thus it was back to the drawing board to re-figure the better numbers. The result was 2016’s estimates climbing from $6.04 to $6.16, which takes the estimated growth rate from 9% to 13%. Thirteen percent growth is all we need from ESRX, as the stock is as steady and stable as it comes, thus we can live with a lower growth rate than say the 15% to 20% I usually expect in my stocks. ESRX has grown profits each year since 1996, and I’ve owned ESRX since 2001 when I first purchased it in the Growth Portfolio at $7 per share. The company makes money by signing up large companies and organizations for drug plans, then uses its might to negotiate lower prices for prescription drugs in behalf of its customers. This is a well run company. Management buys back lots of stock, and profits are fueled by sales reps switching customers from low-margin brand name drugs to high-margin generics. ESRX also acquires other PBMs. The stock has upside to my 2016 Fair Value of 12%. This is a perfect stock for conservative growth investors. |
One Year Chart |
 Like many stocks this year, ESRX didn’t make much headway in 2015 even through profits grow nicely. Last qtr the company had 12% profit growth on -2% sales growth (flat sales is normal for ESRX). Everything here looks normal, with profits expected to grow 13% next year and long-term. The P/E of 14 is very reasonable. |
Fair Value |
 ESRX gets my highest rating for certainty and consistency. Earnings are very dependable, and notice not a single down year in profits. I feel the stock is worth 16x earnings which gives it a respectable 12% upside to 2016’s Fair Value. |
Bottom Line |
Express Scripts is a good, solid company that has given investors steady returns for more than a decade. The ten-year chart is always a thing of beauty. Express Scripts just upped estimates, but in the end it’s still expected to grow 13% which is the norm for this company. At 14x earnings the stock has decent upside into 2016 and beyond. This stock ranks 33rd of 38 in the Growth Portfolio Power Rankings, and is one of the slowest growers in this portfolio. In the Conservative Growth Portfolio it ranks much higher — 20th of 32 stocks — due to its high degree of certainty and consistency. |
Power Rankings |
Growth Stock Portfolio
33 of 38Aggressive Growth Portfolio N/AConservative Stock Portfolio 20 of 32 |
